Australians double-dipping on super have drained $4.3 billion from their accounts, as second round early withdrawals open up

Australians are cashing out their super while they can. (Michele Mossop, Getty Images) (Photo by Michele Mossop, Getty Images)
  • In the week up to July 5, Australians made 511,000 applications to access their super early.
  • Of those, 346,000 were making their second withdrawal of up to $10,000 under the government scheme. A total of 473,000 Australians have now applied for a second withdrawal.
  • The extraordinary demand comes as the economy continues to look uncertain and applicants are approved regardless of eligibility.
  • Visit Business Insider Australia’s homepage for more stories.

It was always going to prove popular, but with almost three months left to run the superannuation early access scheme is catching a strong second wind.

With a second instalment becoming available from 1 July, Australians have rushed to again drain their retirement savings, according to the latest APRA figures out on Tuesday.

In the week to 5 July, straddling the two financial years, super funds received 511,000 withdrawal applications.

“Out of the 511,000 applications received, 165,000 were for members applying for early release for the first time and 346,000 were for members applying for the second time,” APRA said.

“The average amount applied for by those making a repeat application was $8,904.”

With applications for a second withdrawal oepning up the week prior, more than 473,000 second-round withdrawals have been submitted, just days into the new financial year. Those second withdrawals alone represent an additional $4.2 billion drained from the super system.

If you throw in the week’s initial applications as well, that total swells to around $5.5 billion that will flow out of super accounts in the space of a few days. With each fund accessed noted as an application however it’s impossible to tell just how many individuals are actually withdrawing.

It follows suggestions by Treasury that more than $1 billion a day is currently being siphoned off. With still two and a half months left to run, it’s been predicted that withdrawals will far exceed initial estimates.

The scheme’s popularity, while unexpected by Treasury, is perhaps wholly understandable.

For one, the scheme offered an unprecedented opportunity for Australians to get their hands on earnings that are otherwise locked away for decades. For some, that proved too good a window to let pass, whether or not they in fact required the money.

Couple that with the fact the scheme’s administrator, the Australian Taxation Office (ATO), has approved applicants regardless of their eligibility, and the blowout makes sense.

Throw in a global pandemic and a looming recession that has been exhaustively compared to the 1930s Great Depression, and the demand makes even more sense.

Some applicants told Business Insider Australia they did so to get onto the property ladder. Others said they simply wanted access to their money or didn’t understand how the scheme worked in the first place.

Whether out of a sense of opportunity or of anxiety, there’s a palpable concern that things could go from bad to worse.

Interestingly, enthusiasm for the second wave of withdrawals does not appear to have slackened since the ATO began talking tough on ‘illegitimate’ withdrawals.

Within the first week of the scheme, more than 660,000 applicants were received, with 162,000 paid out.

With most would-be applicants now wholly aware of the scheme, those who will make a second withdrawal likely won’t wait until September to do so. Those who do are likely cautiously watching to see how the economy holds up.

Treasurer Josh Frydenberg will unveil his budget update on July 23, along with the government’s move on JobKeeper and second phase stimulus measures.

The government’s decisions on economic support have the power to either allay fears – or set off a new wave.